Question 1

The number of unskilled workers employed before and after a change in the minimum wage is found to be the same.This means

Accepted Answer

A)  the minimum wage change did not affect the labor market. 
B)  nothing, unless we know that the number of hours worked by each worker has not changed. 
C)  the minimum wage could be below the equilibrium value for unskilled labor. 
D)  either b or c 
E)  none of the above 
A)  the minimum wage change did not affect the labor market. 
B)  nothing, unless we know that the number of hours worked by each worker has not changed. 
C)  the minimum wage could be below the equilibrium value for unskilled labor. 
D)  either b or c 
E)  none of the above

Question 2

Exhibit 4-8
  
-Refer to Exhibit 4-8. If the wheat market is in competitive equilibrium the producers' surplus will equal

Accepted Answer

A)  area 1 + 2 + 3 
B)  area 1 + 2 + 4 
C)  area 3 + 5 
D)  area 1 + 2 + 3 + 4 + 5 
E)  area 6 
A)  area 1 + 2 + 3 
B)  area 1 + 2 + 4 
C)  area 3 + 5 
D)  area 1 + 2 + 3 + 4 + 5 
E)  area 6

Question 3

Exhibit 4-3
  
-Refer to Exhibit 4-3.If price P2 is a price ceiling,then

Accepted Answer

A)  there is a shortage in the market for good X. 
B)  the highest price that can legally be charged in this market is P3. 
C)  the price at which exchange legally takes place in the market for good X is P2. 
D)  the quantity exchanged is less than the quantity demanded. 
E)  all of the above 
A)  there is a shortage in the market for good X. 
B)  the highest price that can legally be charged in this market is P3. 
C)  the price at which exchange legally takes place in the market for good X is P2. 
D)  the quantity exchanged is less than the quantity demanded. 
E)  all of the above

Question 4

Exhibit 4-1
  
-Refer to Exhibit 4-1.Suppose the good shown is being sold at the $6 price ceiling.At a quantity of 75 units,what is the maximum per-unit price buyers would be willing to pay for a good "tied" to the good shown in the exhibit?

Accepted Answer

A)  $10 
B)  $8 
C)  $6 
D)  $4 
E)  none of the above 
A)  $10 
B)  $8 
C)  $6 
D)  $4 
E)  none of the above

Question 5

Exhibit 4-1
  
-Refer to Exhibit 4-1.The number of units exchanged at the price ceiling is

Accepted Answer

A)  75. 
B)  125. 
C)  175. 
D)  100. 
A)  75. 
B)  125. 
C)  175. 
D)  100.

Question 6

Exhibit 4-9
  
-Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $15. The number of units that would be exchanged in this market would be

Accepted Answer

A)  150, since that is the equilibrium quantity and the price ceiling is above the equilibrium price. 
B)  80, since that is the number of units demanded at the price ceiling. 
C)  260, since that is the number of units supplied at the price ceiling. 
D)  170, since that is the average of the quantity demanded and the quantity supplied at the price ceiling. 
A)  150, since that is the equilibrium quantity and the price ceiling is above the equilibrium price. 
B)  80, since that is the number of units demanded at the price ceiling. 
C)  260, since that is the number of units supplied at the price ceiling. 
D)  170, since that is the average of the quantity demanded and the quantity supplied at the price ceiling.

Question 7

If the minimum wage law sets a wage floor below the equilibrium wage in the market for unskilled labor,then the

Accepted Answer

A)  minimum wage will create a surplus of unskilled labor. 
B)  minimum wage will create a shortage of unskilled labor. 
C)  minimum wage will not affect the unskilled labor market. 
D)  unskilled labor market will change, but we cannot be certain how. 
A)  minimum wage will create a surplus of unskilled labor. 
B)  minimum wage will create a shortage of unskilled labor. 
C)  minimum wage will not affect the unskilled labor market. 
D)  unskilled labor market will change, but we cannot be certain how.

Question 8

The minimum wage is a good example of a price floor.

Accepted Answer

A) True 
 B)False

Question 9

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market.

Accepted Answer

In order for a price floor to

Question 10

Exhibit 4-3
  
-Refer to Exhibit 4-3.If P1 is a price ceiling,the maximum (per-unit)amount buyers are willing to pay to purchase Q1units is

Accepted Answer

A)  P1. 
B)  P2. 
C)  P3. 
D)  P1 + P2. 
E)  P3 - P1. 
A)  P1. 
B)  P2. 
C)  P3. 
D)  P1 + P2. 
E)  P3 - P1.

Question 11

If the absolute price of a new car is $40,000 and the relative price of a laptop computer in terms of cars is 1/20 of a car,it follows that the absolute price of a laptop is

Accepted Answer

A)  $10,000. 
B)  $1,000. 
C)  $4,000. 
D)  $2,000. 
E)  There is not enough information to answer the question. 
A)  $10,000. 
B)  $1,000. 
C)  $4,000. 
D)  $2,000. 
E)  There is not enough information to answer the question.

Question 12

Exhibit 4-8
  
-Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the size of the producers' surplus at PF?

Accepted Answer

A)  area 2 + 3 + 4 + 5 
B)  area 2 + 3 
C)  area 4 
D)  area 6 
A)  area 2 + 3 + 4 + 5 
B)  area 2 + 3 
C)  area 4 
D)  area 6

Question 13

Suppose the government sets a price floor that is above the equilibrium price for a given good.It can be said that at the price floor,

Accepted Answer

A)  although sellers are selling all of the product that they desire at this price, the consumers are not able to buy all that they desire. 
B)  although consumers are purchasing all of the product that they desire at this price, the sellers are not selling all that they desire. 
C)  both sellers and buyers are satisfied with the quantity that is being exchanged. 
D)  both sellers and buyers are exchanging the equilibrium quantity of this good. 
E)  b and d 
A)  although sellers are selling all of the product that they desire at this price, the consumers are not able to buy all that they desire. 
B)  although consumers are purchasing all of the product that they desire at this price, the sellers are not selling all that they desire. 
C)  both sellers and buyers are satisfied with the quantity that is being exchanged. 
D)  both sellers and buyers are exchanging the equilibrium quantity of this good. 
E)  b and d

Question 14

Explain why it is important to differentiate between the "number of unskilled workers" and the "number of unskilled labor hours" when evaluating the impact on the market for unskilled labor of a change in minimum wage.

Accepted Answer

If the minimum wage is imposed above the

Question 15

Situation 4-1
  
-Refer to Situation 4-1.If no price controls had been in place,the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been

Accepted Answer

A)  an increase in both price and quantity. 
B)  an increase in price and a decrease in quantity. 
C)  a decrease in price and an increase in quantity. 
D)  a decrease in both price and quantity. 
A)  an increase in both price and quantity. 
B)  an increase in price and a decrease in quantity. 
C)  a decrease in price and an increase in quantity. 
D)  a decrease in both price and quantity.

Question 16

A price floor is a government-mandated

Accepted Answer

A)  minimum price below which legal trades cannot be made. 
B)  maximum price above which legal trades cannot be made. 
C)  minimum price at which all units of the good must be legally sold. 
D)  minimum price below which legal trades can be made. 
A)  minimum price below which legal trades cannot be made. 
B)  maximum price above which legal trades cannot be made. 
C)  minimum price at which all units of the good must be legally sold. 
D)  minimum price below which legal trades can be made.

Question 17

If the current market price of good Z is below the equilibrium price of good Z

Accepted Answer

A)  it must be because the government has imposed a price ceiling in the market for good Z. 
B)  there is a shortage of good Z. 
C)  there is a surplus of good Z. 
D)  demand must necessarily decrease to restore equilibrium. 
E)  a and b 
A)  it must be because the government has imposed a price ceiling in the market for good Z. 
B)  there is a shortage of good Z. 
C)  there is a surplus of good Z. 
D)  demand must necessarily decrease to restore equilibrium. 
E)  a and b

Question 18

What condition is necessary for a price ceiling to have an impact on a market? Describe at least three of the effects that a price ceiling can have on a market.

Accepted Answer

In order for a price ceiling to have an

Question 19

Which of the following is true?

Accepted Answer

A)  Buyers always prefer lower prices to higher prices. 
B)  Buyers never prefer lower prices to higher prices. 
C)  Buyers rarely prefer lower prices to higher prices. 
D)  Buyers prefer lower prices to higher prices, ceteris paribus. 
A)  Buyers always prefer lower prices to higher prices. 
B)  Buyers never prefer lower prices to higher prices. 
C)  Buyers rarely prefer lower prices to higher prices. 
D)  Buyers prefer lower prices to higher prices, ceteris paribus.

Question 20

Buyers always prefer lower prices to higher prices.

Accepted Answer

A) True 
 B)False

Exam 4: Prices: Free, Controlled, and Relative

The number of unskilled workers employed before and after a change in the minimum wage is found to be the same.This means

Exhibit 4-8 -Refer to Exhibit 4-8. If the wheat market is in competitive equilibrium the producers' surplus will equal

Exhibit 4-3 -Refer to Exhibit 4-3.If price P2 is a price ceiling,then

Exhibit 4-1 -Refer to Exhibit 4-1.Suppose the good shown is being sold at the $6 price ceiling.At a quantity of 75 units,what is the maximum per-unit price buyers would be willing to pay for a good "tied" to the good shown in the exhibit?

Exhibit 4-1 -Refer to Exhibit 4-1.The number of units exchanged at the price ceiling is

Exhibit 4-9 -Refer to Exhibit 4-9. Suppose that the government imposes a price ceiling at a price of $15. The number of units that would be exchanged in this market would be

If the minimum wage law sets a wage floor below the equilibrium wage in the market for unskilled labor,then the

The minimum wage is a good example of a price floor.

What condition is necessary for a price floor to have an impact on a market? Describe two effects that a price floor can have on a market.

Exhibit 4-3 -Refer to Exhibit 4-3.If P1 is a price ceiling,the maximum (per-unit)amount buyers are willing to pay to purchase Q1units is

If the absolute price of a new car is $40,000 and the relative price of a laptop computer in terms of cars is 1/20 of a car,it follows that the absolute price of a laptop is

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at PF. What is the size of the producers' surplus at PF?

Suppose the government sets a price floor that is above the equilibrium price for a given good.It can be said that at the price floor,

Explain why it is important to differentiate between the "number of unskilled workers" and the "number of unskilled labor hours" when evaluating the impact on the market for unskilled labor of a change in minimum wage.

Situation 4-1 -Refer to Situation 4-1.If no price controls had been in place,the effect of the oil embargo on the equilibrium price and quantity of gasoline would have been

A price floor is a government-mandated

If the current market price of good Z is below the equilibrium price of good Z

What condition is necessary for a price ceiling to have an impact on a market? Describe at least three of the effects that a price ceiling can have on a market.

Which of the following is true?

Buyers always prefer lower prices to higher prices.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Exhibit 4-3 -Refer to Exhibit 4-3.If price P₂ is a price ceiling,then

Exhibit 4-3 -Refer to Exhibit 4-3.If P₁ is a price ceiling,the maximum (per-unit)amount buyers are willing to pay to purchase Q₁units is

Exhibit 4-8 -Refer to Exhibit 4-8. Suppose that wheat producers lobby the government for a price floor and receive one. This price floor is set at P_F. What is the size of the producers' surplus at P_F?